Investment trust insider on F&C Investment Trust – James Carthew: How F&C beats the Machine
A broad growth portfolio spiced with private equity have helped F&C outperform global index-trackers.
It is all too easy to get distracted by short-term moves when investing and it is good practice to step back and consider the big picture every now and then. I was reading the six-month figures of the F&C Investment Trust (FCIT) to the end of June 2024 last week when it hit me that Paul Niven has now been in charge of that portfolio for 10 years – having taken up the reins in 2014. In my nearly four decades in the City, Niven is just the third manager to have that job. He replaced Jeremy Tigue, who had been in the role since 1997, while Tigue had replaced Michael Hart, who served for 28 years from 1969.
Although Scottish Mortgage (SMT) and Pershing Square Holdings (PSH) are larger, with a market value of more than £5.2bn, FCIT is still a flagship for the sector. Even after Alliance Trust (ATST) concludes its merger with Witan (WTAN), it will not quite match FCIT’s scale.
Under Niven, over the 10 years to 30 June, FCIT generated 11.9% per year on average or about 209%. However, substantial share buybacks mean that it has roughly doubled rather than tripled in size. Those buybacks have reduced the volatility of its discount and – since that has narrowed since Niven took on the trust – have contributed to shareholder returns of 12.3% per year on average, or about 219%. At 7%, FCIT’s discount is wider than it should be, but has returned to a more acceptable range after a period where it dipped into double digits.
FCIT benchmarks its returns against the FTSE All-World Index. Over 10 years, the index returned an average of 11.7% per year, which works out at about 202%, so FCIT outperformed modestly. However, all the exchange-traded funds (ETFs) that I looked at that seek to track that index have lagged it a little over 10 years. FCIT does better than a passive investment…. read more here